Correlation Between Larimar Therapeutics and Rezolute

Can any of the company-specific risk be diversified away by investing in both Larimar Therapeutics and Rezolute at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Larimar Therapeutics and Rezolute into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Larimar Therapeutics and Rezolute, you can compare the effects of market volatilities on Larimar Therapeutics and Rezolute and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Larimar Therapeutics with a short position of Rezolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larimar Therapeutics and Rezolute.

Diversification Opportunities for Larimar Therapeutics and Rezolute

0.51

Correlation Coefficient

Larimar Therapeutics  Rezolute

Very weak diversification

The 3 months correlation between Larimar and Rezolute is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Rezolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rezolute and Larimar Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Larimar Therapeutics are associated (or correlated) with Rezolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rezolute has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Rezolute go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and Rezolute

Given the investment horizon of 90 days Larimar Therapeutics is expected to under-perform the Rezolute. In addition to that, Larimar Therapeutics is 1.34 times more volatile than Rezolute. It trades about -0.02 of its total potential returns per unit of risk. Rezolute is currently generating about 0.04 per unit of volatility. If you would invest  476.00  in Rezolute on August 30, 2024 and sell it today you would earn a total of  23.00  from holding Rezolute or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Larimar Therapeutics  vs.  Rezolute

Larimar Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Rezolute

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rezolute are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Rezolute may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Larimar Therapeutics and Rezolute

The main advantage of trading using opposite Larimar Therapeutics and Rezolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larimar Therapeutics position performs unexpectedly, Rezolute can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rezolute will offset losses from the drop in Rezolute's long position.

The idea behind Larimar Therapeutics and Rezolute pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.